This company is seeing a decrease in fundamentals and I view them as a high-risk investment. There are steps it can take to better the fundamentals, but I haven’t seen them move to make them. The preferred shares carry a significant amount of risk, but are worth a small allocation due to market overreaction.
CBL & Associates Properties (CBL) has often been covered for preferred shares. However, I put a risk rating of 5 on the stock and suggested investors keep their exposure very small. It maintains a risk rating of 5, and exposure should still be limited. The fundamentals have weakened materially over the last 6 months as leasing spreads went from bad to terrible. However, for traders there is a decent chance for a bounce since management guidance included a dividend rate for 2018 (at $.80, same as Q4 2017 annualized). Further, I find the preferred share dividend is still very effectively covered even when applying “Armageddon” level bear scenarios. The major problem is poor capital allocation decisions as management ignored their high cost of capital.
Source: Seeking Alpha
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